2Q Northern & Central New Jersey Industrial Report. NAI Hanson sold 45,000 square feet at 475 Mola Boulevard in Elmwood Park

Transcription

1 Northern & Central New Jersey Industrial Report NAI Hanson sold 45,000 square feet at 475 Mola Boulevard in Elmwood Park

2 Edition

3 Submarket Map Sussex Hamburg Franklin West Milford Hardwick Mahwah Newton Montvale Sparta Wanaque Ridgewood Kinnelon Norwood Hopatcong Wayne Tenafly Montville Totowa Hackettstown Paramus Boonton Clifton Dover Hackensack Budd Parsippany West Englewood Lake Orange Randolph Rutherford Secaucus Long Valley Morristown Newark Jersey City Union Cokesbury Scotch Elizabeth Bayonne Bedminister Plains Linden Lebanon Warren Rahway Carteret Somerville Edison Avenel Flemington East Brunswick South Amboy Warren & Sussex Route 46/23/3 Corridor Northern Bergen County Central Bergen County Meadowlands Suburban Essex Princeton Jamesburg Cranbury Robbinsville Hamilton Freehold Trenton Morris Region Port Hunterdon Somerset Exit 10/12 Brunswick/Exit 9 Exit 8A Exit 7A

4 Northern & Central County Overview Total Vacant Total Vacant Total Net Total SF RBA Under Total Average Total RBA Available SF Available % Absorption Leased Construction Asking Rate NJ Overall 667,080,196 21,278, % 5,227,757 6,061,927 8,354,254 $7.76 Middlesex 194,112,396 3,519, % 2,888,537 2,645,070 3,317,026 $7.56 Bergen 92,163,297 3,586, % 357, , ,416 $8.98 Hudson 82,991,478 3,401, % 542, , ,010 $8.82 Essex 65,645,138 1,882, % (15,467) 259,771 1,084,451 $8.59 Union 62,947,996 2,520, , , ,051 $7.35 Passaic 53,948,710 2,041, % 227, , ,500 $7.36 Morris 38,427,613 2,040, % 185, ,438 35,000 $7.57 Mercer 33,410,581 1,083, % 447,380 83, ,600 $4.81 Somerset 27,695, , % 55,666 78, ,000 $7.33 Hunterdon 6,638, , % 18,366 18,600 0 $8.55 Warren 6,348, , % (42,191) 50,252 1,000,200 $5.14 Sussex 2,750, , % 64,900 4,000 0 $5.28 Orange, NY 28,335,419 1,402, % 86, ,639 60,000 $6.09 Rockland, NY 15,391, , % (23,945) 29,659 52,000 $9.65 Submarket Overview Total RBA Total Vacant Available SF Total Vacant Available % Total Net Absorption Total SF Leased RBA Under Construction Total Average Asking Rate Ports 138,356,753 6,008, % 331, ,974 1,589,502 $7.62 Exit 10/12 105,982,055 2,361, % 1,337, ,981 1,898,864 $8.07 Meadowlands 94,697,123 2,801, % 398,358 1,064, ,426 $9.12 Exit 8A 66,383, , % 1,544,603 1,665,089 1,418,162 $6.46 Route 46/23/3 Corridor 53,583,637 2,029, % 279, , ,500 $7.34 Exit 7A 43,303,002 1,529, % 481, , ,350 $5.58 Morris Region 36,727,057 2,022, % 143, ,538 35,000 $7.58 Somerset 27,522, , % 55,666 78, ,000 $7.37 Central Bergen County 27,018, , % 372, ,825 0 $10.25 Suburban Essex 23,891, , % 90, ,575 89,000 $8.73 Northern Bergen County 22,056,315 1,115, % 178,800 94,637 30,000 $8.62 Brunswick/Exit 9 21,747, , % 6, $6.16 Warren & Sussex 9,098, , % 22,709 54,252 1,000,200 $5.19 Hunterdon 6,559, , % 18,366 18,600 0 $8.18 Source: CoStar 10,000 + sf - All information comes from sources deemed reliable by NAI James E. Hanson.

5 Leasing Activity The Northern and Central New Jersey market saw over 6,000,000 square feet leased in the second quarter of Leasing activity is up over 1,000,000 square feet compared to the previous quarter. The average asking rate ended the quarter at $7.76 per square foot, which is up $0.06 per square foot compared to the first quarter while the vacancy continues to decline ending the quarter at 3.2%, down 0.3% from the first quarter. Net absorption ended with over 5,200,000 square feet absorbed. The Central Bergen County submarket saw the biggest jump in the average asking rate with an increase of $1.45 per square foot compared to the first quarter. The submarket ended the quarter with an average asking rate of $10.25 per square foot. The Meadowlands submarket followed behind ending the quarter at $9.12 per square foot. Vacancy remains tight in all the submarkets. All 14 submarkets have vacancy rates of 5.6% or below. Three of the tightest submarkets included Exit 8A, Hunterdon and Brunswick/Exit 9. The vacancy rates for these 3 submarkets are 1.1%, 1.8% and 1.9% respectively. Top lease transactions for the quarter included Clutter, One Stop Logistics LLC and Freeze. Clutter leased 453,030 square feet at 1065 Cranbury South River Road in South Brunswick (building was recently delivered in June); One Stop Logistics LLC leased 369,000 square feet at 1065 Cranbury S River Rd., South Brunswick Rendering 83 Stults Road in South Brunswick; and Freeze did a sale leaseback at 318,389 square feet at 473 Ridge Road in Monmouth Junction. All 3 transactions were done in the Exit 8A submarket. Top renewals for the quarter included Modaexpress of USA renewing their 164,232 square foot space at 900 Secaucus Road in Secaucus and Bind-Rite Service, Inc. renewing their 120,467 square foot space at Horizon Boulevard in South Hackensack. $ % 1,045,753 SF *Compared to 1Q18 Northern & Central NJ Northern & Central NJ Leasing Activity $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $ % 3.0% 2.0% 1.0% 0.0% 14,000,000 13,000,000 12,000,000 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 NNN Rent Overall Vacant Available Percent % Total

6 Sales Activity With interest rates rising, the spread between the bid and ask prices have moderated investment sale growth in the first half of the year. Users still have interest in purchasing real estate, but they too have been negatively affected by rising prices. -Scott K. Perkins, sior Senior Vice President NAI James E. Hanson There was over $435,000,000 in sales volume this quarter. The average price per square foot ended at $98.73, up approximately $16.91 per square foot from the previous quarter. Sitex Group s portfolio sale to Colony NorthStar, Inc. (now Colony Capital) was the top transaction for the quarter. It was an 11 property portfolio sale that sold for $165 per square foot. Ten (10) of the 11 properties sold, which totaled 639,681 square feet. The 11th building is 1200 Valley Brook Avenue, Lyndhurst scheduled to close in the first quarter of The properties included 1200 Valley Brook Avenue in Lyndhurst; 8 Vreeland Avenue in Totowa; 245 Moonachie Road in Moonachie; Schiller Street in Elizabeth; Veterans Boulevard in Carlstadt; 400 Gotham Parkway in Carlstadt; Plant Road in Hasbrouck Heights; 50 Furler Street in Totowa; 620 Gotham Parkway in Carlstadt; and 40 Fairfield Place in West Caldwell. This is Colony s first New Jersey acquisition. The top single building transaction for the quarter was 200 Riser Road in Little Ferry. The 289,575 square foot building sold for $40,500,000 or $ per square foot. Dassault Falcon Jet Corp, who has been a tenant in the building for some time, purchased the building from LaSalle Investment Management, Inc. 473 Ridge Road in Monmouth Junction also sold this quarter. Freeze, who is a tenant in the building under the name Central Mills, Inc., did a sale leaseback and sold the building to Saadia Group LLC. They will remain as a long term tenant. The 318,389 square foot building sold for $29,000,000 or $91.08 per square foot. Bridge Development Partners announced that they have acquired parcels on Weston Canal Road and Randolph Road in Somerset. They are planning a Bridge Point Somerset three (3) building project consisting of 1,700,000 square feet on 129 acres. They ve announced a 2019 mid year delivery date.

7 Significant Leases & Sales Significant Leases Tenant Address Size (SF) Submarket Clutter 1065 Cranbury S River Rd., South Brunswick 453,030 Exit 8A One Stop Logistics LLC 83 Stults Rd., South Brunswick 369,000 Exit 8A Freeze (Sale Leaseback) 473 Ridge Rd., Monmouth Junction 318,389 Exit 8A Metropolitan Warehouse & Delivery 960 High St., Perth Amboy 220,200 Exit 10/12 Farren International Holdings, Inc. (Renewal) 1881 US Highway 46, Ledgewood 176,000 Morris Region Avanti Linens (Sale Leaseback) 234 Moonachie Rd., Moonachie 172,016 Meadowlands Modaexpress of USA (Renewal) 900 Secaucus Rd., Secaucus 164,232 Meadowlands Colart 2 Corporate Place S., Piscataway 150,000 Exit 10/12 Bind-Rite Service, Inc. (Renewal) Horizon Blvd., S Hackensack 120,467 Meadowlands CNC Associates 303 Helen St., South Plainfield 117,875 Exit 10/12 Farren International Holdings, Inc US Highway 46, Ledgewood 108,000 Morris Region ProFoot 919 Fairmount Ave., Elizabeth 64,500 Ports Western Pacific Foods 64 Carter Dr., Edison 62,250 Exit 10/12 PSI Group, Inc. (Renewal) 100 Lackawanna Ave., Parsippany 46,855 Morris Region Significant Sales Address Size (SF) Price Buyer Seller 200 Riser Rd., Little Ferry 289,575 $40,500,000 Dessault Falcon Jet Corp LaSalle Investment Management, Inc. 473 Ridge Rd., Monmouth Junction 318,389 $29,000,000 Saadia Group LLC Freeze 234 Moonachie Rd., Moonachie 172,016 $23,500,000 Liberty Property Trust Avanti Linens 100 Crow Mills Rd., Keasbey 133,032 $18,624,480 Seville Classics, Inc. TA Realty 7-9 Vreeland Rd., Florham Park 155,891 $15,250,000 SK Realty Mgmt Lone Star Funds 433 Murray Hill Pkwy., East Rutherford 100,031 $14,000,000 Goodman North America Home Source Industries, LLC 350 Secaucus Rd., Secaucus 80,000 $11,350,000 Seagis Property Group LP 9 Porete Ave., North Arlington 65,300 $6,100,000 The Hampshire Companies 475 Mola Blvd., Elmwood Park* 45,000 $4,015,000 The Stro Companies Jump Design Group Bernard Jacobwitz Music Express East, Inc Green St., South Hackensack* 11,550 $1,200,000 J3D2, LLC 256 Green Street LLC *NAI Hanson Deal

8 Under Construction Rendering of Miller Street, Newark Rendering of 303 Helen Street, South Plainfield Address Size (SF) Completion Developer Type 942 Memorial Pkwy., Phillipsburg (7 building development site) 1,000,200 1Q2019 Bridge Development Partners Spec. Devel Doremus Ave., Newark 870,640 3Q2020 The Morris Companies Spec. Devel Blanchard St., Newark 706,000 3Q2018 The Morris Companies Pre-Leased 152 Route 206, Hillsborough 700,000 3Q2018 Industrial Realty Group Spec. Devel. 429 Delancey St., Newark 661,539 4Q2018 Duke Realty Corporation/ Bridge Development Partners Spec. Devel King Georges Post Rd., Edison 635,086 3Q2018 Federal Business Centers Build-to-Suit Wyckoff Mills Rd., East Windsor 635,000 3Q2018 Exeter Property Group Pre-Leased 700 Kapkowski Rd., Elizabeth 540,000 3Q2018 Prologis Pre-Leased 3 Brick Yard Rd., Cranbury 444,940 4Q2018 Clarion Partners Spec. Devel. 150 Totowa Rd., Wayne 437,500 4Q2018 Peykar Family Properties of Wayne Spec. Devel. 300 Prospect Plains Rd., Cranbury 416,300 3Q2018 The Sudler Companies Spec. Devel. 400 Docks Corner Rd., Monroe Twp. 365,400 3Q2018 Matrix Development Group Pre-Leased 286 Prospect Plains Rd., Cranbury 341,982 3Q2018 The Sudler Companies Spec. Devel. 171 River Rd., Piscataway 311,040 3Q2018 Rockefeller Group Spec. Devel US Highway 130, Dayton 295,350 3Q2018 Clarion Partners/F. Greek Dev. Pre-Leased Miller St., Newark 289,451 3Q2018 Penwood Real Estate Investment Management Spec. Devel. 800 Centennial Ave., Piscataway 277,830 1Q2019 Penford Group Spec. Devel Randolph Ave., Avenel 242,296 3Q2018 Principal Real Estate Investors Spec. Devel. 5 Ethel Blvd., Wood-Ridge 193,805 4Q2018 Duke Realty Corporation/ Bridge Development Partners Spec. Devel. 171 River Rd., Piscataway 192,200 4Q2018 Rockefeller Group Spec. Devel Blair Rd., Carteret 156,067 3Q2018 The Hampshire Companies/AEW Spec. Devel. 2 Corporate Pl S., Piscataway 150,000 2Q2019 The Sudler Companies Pre-Leased Bergen Ave., Kearny 130,043 4Q2018 Hartz Mountain Industries, Inc. Spec. Devel. 303 Helen St., South Plainfield 117,875 3Q2018 Palin Enterprises Pre-Leased 400 Huyler St., South Hackensack 115,611 3Q2018 Forsgate Industrial Partners Spec. Devel.

9 2Q Deliveries Address Size (SF) Leased Tenant(s) 171 River Rd., Piscataway 725, % Best Buy 58 Station Rd., Cranbury 504, % Home Depot 1065 Cranbury S River Rd., Monroe Township 453, % Clutter 2 Turner Place, Piscataway 451, % Cascades Containerboard Packaging 225 Raritan Center Pkwy., Edison 190,293 0% 171 River Road, Piscataway 58 Station Road, Cranbury

10 Ports MARKET SIZE 138,356,753 SF VACANT AVAILABILITY (SF) 6,008,423 SF VACANT AVAILABILITY (%) 4.3% 2Q18 667,974 SF TOTAL ,483 SF AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED The port market has continued to see rent growth and decreased vacancy over the past quarter. The story of a product constrained market on the sale and lease side continues. Another quarter similar to the last, the lack of warehouse distribution space and yard space are driving market conditions. We see no metrics that would indicate any change to the real estate market on the horizon barring any major shifts in the greater economy. Russell Verducci Vice President NAI James E. Hanson 2Q2018 vs. 1Q2018 $7.62 PSF 331,291 SF 99,647 SF 1,589,502 SF 0 SF Trends 0.1% $0.24 Vacancy decreased by 0.1% compared to the previous quarter, ending the second quarter at 4.3%. The rate is down 0.5% from the second quarter of 2017 and down 0.3% from the second quarter of The Ports ended the second quarter with an average asking rate of $7.62 per square foot, up $0.24 per square foot from the previous quarter. The rate is up $0.44 per square foot from the second quarter of 2017 and up $1.09 per square foot from the second quarter of $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 NNN Rent Overall 339,465 SF Vacant Available Percent % Total 6.5% 5.5% 4.5% 3.5% There was over 667,000 square feet leased in the second quarter and over 331,000 square feet absorbed. Top lease transactions included ProFoot leasing 64,500 square feet at 919 Fairmount Avenue in Elizabeth; 56,416 square feet leased at 6 International Way in Newark; and 54,000 square feet leased at 1355 W. Front Street in Plainfield. A top sale transaction included 44 Fadem Road in Springfield. The 20,310 square foot building sold for $2,448,000, or $ per square foot from Gabriel Realty to Atlas Marble and Granite. 44 Fadem Road, Springfield

11 Exit 10/12 MARKET SIZE 105,982,055 SF VACANT AVAILABILITY (SF) 2,361,748 SF VACANT AVAILABILITY (%) 2.2% 2Q18 979,981 SF TOTAL ,303,755 SF 2Q2018 vs. 1Q2018 AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED The market has continued to tighten at Exit 10, with slightly lower vacancy rates reaching levels near 2%. Pricing has remained stable relative to the first quarter, with average rents from $ psf. Leasing activity is strong and with just over one million square feet under development (expected to deliver the second half of 2018), nearly 50% of this new product is spoken for. Eric Demmers Industrial Specialist NAI James E. Hanson $8.07 PSF 1,337,357 SF 2,143,446 SF 1,898,864 SF 1,554,613 SF Trends 0.1% $0.07 The vacancy rate ended the quarter down slightly to 2.2%. The rate is down 0.6% from the second quarter of 2017 and down 0.8% from the second quarter of Average asking rates ended the quarter at $8.07 per square foot, down $0.07 per square foot compared to the previous quarter. The rate is up $0.92 per square foot from the second quarter of 2017 and up $1.90 per square foot from the second quarter of $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $ ,793 SF 8.0% 7.0% 3.0% 2.0% 1.0% 0.0% The Exit 10/12 submarket saw over 979,000 square feet leased in the second quarter while there was over 1,337,000 square feet absorbed. Top lease transactions included Metropolitan Warehouse and Delivery leasing 220,200 square feet at 960 High Street in Perth Amboy; Colart leasing 150,000 square feet at 2 Corporate Place South in Piscataway; and CNC Associates leasing 117,875 square feet at 303 Helen Street in South Plainfield. A significant transaction for the quarter included 100 Crows Mill Road in Keasbey. The 133,032 square foot warehouse sold from TA Realty to Seville Classics, Inc., who is going to operate out of the building. The property sold for $18,624,480, or $ per square foot. NNN Rent Overall Vacant Available Percent % Total 100 Crows Mill Road, Keasbey

12 Meadowlands It s a great time to be an owner and a terrible time to be a sign company. In my 30 year career, due to the robust leasing and sale market, I have never seen such a low inventory of industrial properties. Rental rates continue to hit all time highs whereas vacancy rates are at an all time low. Andrew Somple, sior Senior Vice President NAI James E. Hanson MARKET SIZE 94,697,123 SF VACANT AVAILABILITY (SF) 2,801,189 SF VACANT AVAILABILITY (%) 3.0% 2Q18 1,064,332 SF TOTAL ,957,063 SF 2Q2018 vs. 1Q2018 AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED $9.12 PSF 398,358 SF 1,416,348 SF 490,426 SF 242,120 SF Trends 0.6% $0.15 The Meadowlands ended the quarter with a vacancy rate of 3%. Vacancy is down 0.3% compared to the second quarter of 2017 and down 2.3% compared to the second quarter of The average asking rate is the second highest among the submarkets. The rate ended the quarter at $9.12 per square foot. Compared to the second quarter of 2017, the rate is up $0.70 per square foot and compared to the second quarter of 2016, the rate is up $1.86 per square foot. There was over 1,064,000 square feet leased in the second quarter and over 398,000 square feet absorbed. Top lease transactions included Avanti Linens, Inc. leasing 172,016 square feet at 234 Moonachie Road in Moonachie in a sale leaseback; Modaexpress of USA renewing their 164,232 square feet at 900 Secaucus Road in Secaucus; and Bind- Rite Service renewing their 120,467 square feet at Horizon Boulevard in South Hackensack. 200 Riser Road in Little Ferry sold this quarter from LaSalle Investment Management, Inc. to Dassault Falcon Jet Corp. The 289,575 square foot warehouse on 12.5 acres sold for $40,500,000 or $ per square foot. Dassault Falcon Jet has been a tenant in the building for quite some time. $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 NNN Rent Overall 171,601 SF Vacant Available Percent % Total 5.5% 4.5% 3.5% 3.0% 2.5% 2.0% 200 Riser Road, Little Ferry

13 Exit 8A In spite of new building construction continuing as quickly as it is possible to get buildings out of the ground, the vacancy rate continues to drop thanks to a number of very large leases, highlighted by Wayfair Inc. s leasing of 1,300,000 square feet of space. The vacancy rate remains below 2% in this submarket which is a historic low. MARKET SIZE 66,383,185 SF VACANT AVAILABILITY (SF) 748,504 SF VACANT AVAILABILITY (%) 1.1% 2Q18 1,665,089 SF TOTAL ,609,055 SF AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED Kenneth D. Lundberg, sior Senior Vice President NAI James E. Hanson $6.46 PSF 1,544,603 SF 2,440,656 SF 1,418,162 SF 2,353,546 SF 2Q2018 vs. 1Q2018 Trends 0.2% $0.19 The lowest vacancy is found in the Exit 8A submarket. The quarter ended at 1.1%. Vacancy is down both 0.9% and 0.7% compared to the second quarter of 2017 and the second quarter of 2016 respectively. The average asking rate ended the quarter at $6.46 per square foot. The rate is down $0.32 per square foot from the second quarter of 2017, but up $1.22 per square foot from the second quarter of $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $ ,123 SF 3.0% 2.0% 1.0% 0.0% The leasing activity was highest in this submarket with over 1,665,000 square feet leased and there was over 1,544,000 square feet absorbed. Top lease transactions included Clutter leasing 453,030 square feet at 1065 Cranbury South River Road in South Brunswick; One Stop Logistics LLC leasing 369,000 at 83 Stults Road in South Brunswick; and Freeze leasing back 318,389 square feet at 473 Ridge Road in Monmouth Junction. NNN Rent Overall Vacant Available Percent % Total 473 Ridge Road in Monmouth Junction was a significant transaction for the quarter. Freeze did a sale leaseback and sold the building to Saadia Group LLC. The 318,389 square foot building sold for $29,000,000 or $91.08 per square foot. Freeze has been a tenant in the building since Ridge Road, Monmouth Junction

14 Route 46/23/3 Corridor MARKET SIZE 53,583,637 SF VACANT AVAILABILITY (SF) 2,029,160 SF VACANT AVAILABILITY (%) 3.8% 2Q18 503,024 SF TOTAL ,029,837 SF 2Q2018 vs. 1Q2018 AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED $7.34 PSF 279,978 SF 290,866 SF 437,500 SF 0 SF 0.7% $ ,789 SF Trends The Route 46/23/3 Corridor s vacancy rate ended the quarter down 0.7% to 3.8%. Vacancy is up 0.4% compared to the second quarter of 2017, but down 0.9% compared to the second quarter of Average asking rates are up $0.23 per square foot compared to the previous quarter. Asking rates ended the quarter at $7.34 per square foot, down $0.17 per square foot compared to the second quarter of 2017 and up $1.22 per square foot compared to the second quarter of There was over 503,000 square feet leased for the quarter and over 279,000 square feet absorbed. Top lease transactions included 75,000 square feet leased at 415 Hamburg Turnpike in Wayne; 42,325 square feet leased at 90 Dayton Avenue in Passaic; and 40,000 square feet leased at 75 Wood Street in Paterson. 443 Newark Pompton Turnpike in Wayne sold from M&A Real Estate Co LLC to Donnelly Construction. The 29,000 square foot building on 14 acres sold for $4,000,000 or $ per square foot. Donnelly Construction is going to occupy the building. $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $ % 4.5% 3.5% 3.0% NNN Rent Overall Vacant Available Percent % Total 443 Newark Pompton Turnpike, Wayne

15 Exit 7A MARKET SIZE 43,303,002 SF VACANT AVAILABILITY (SF) 1,529,057 SF VACANT AVAILABILITY (%) 3.5% 2Q18 202,869 SF TOTAL ,723 SF 2Q2018 vs. 1Q2018 AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED $5.58 PSF 481,833 SF 481,041 SF 679,350 SF 0 SF 0.1% $ ,015 SF Trends Vacancy ended the second quarter at 3.5%, down slightly from the previous quarter. The rate is down 2.1% from the second quarter of 2017 and down 0.9% from the second quarter of Average asking rates are up $0.05 per square foot from the previous quarter ending the second quarter at $5.58 per square foot. The rate is up $0.30 per square foot from the second quarter of 2017 and up $1.17 per square foot from the second quarter of There was over 202,000 square feet leased in the second quarter and over 481,000 square feet absorbed. Top lease transactions included 51,450 square feet leased at 323 Fairfield Road in Freehold and 36,700 square feet leased at 25 Princess Diana Drive in Ewing. A top sale transaction included 231 Bakers Basin Road in Lawrenceville, a 50,000 square foot warehouse. Office Impressions purchased the property from Britton Industries for $2,820,000 or $56.40 per square foot. $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $ % 4.5% 3.5% 3.0% NNN Rent Overall Vacant Available Percent % Total 323 Fairfield Road, Freehold

16 Morris Region MARKET SIZE 36,727,057 SF VACANT AVAILABILITY (SF) 2,022,965 SF VACANT AVAILABILITY (%) 5.5% 2Q18 569,538 SF TOTAL ,711 SF 2Q2018 vs. 1Q2018 AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED $7.58 PSF 143,587 SF 50,920 SF 35,000 SF 0 SF 1.5% $ ,365 SF Trends The Morris Region, which saw the biggest decline in vacancy from the previous quarter, ended with a rate of 5.5%. The rate is down 2.2% from the second quarter of 2017 and down 0.3% from the second quarter of Average asking rates jumped $0.53 per square foot compared to the previous quarter ending at $7.58 per square foot. Rates are up $0.62 per square foot from the second quarter of 2017 and up $1.14 per square foot from the second quarter of Over 569,000 square feet was leased in the second quarter and over 143,000 square feet was absorbed. Top lease transactions included Farren International Holdings, Inc. renewing their 176,000 square feet at 1881 US Highway 46 in Ledgewood as well as leasing an additional 108,000 square feet. Another top transaction included PSI Group, Inc. renewing their 46,855 square feet at 100 Lackawanna Avenue in Parsippany. A top sale transaction included 7-9 Vreeland Avenue in Florham Park. Lone Star Funds sold the 155,891 square foot manufacturing building for $15,250,000 or $97.82 per square foot to SK Realty Management. The property was 87.9% leased at the time of sale. $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 NNN Rent Overall Vacant Available Percent % Total 8.5% 8.0% 7.5% 7.0% 6.5% 5.5% 4.5% 1881 US Highway 46, Ledgewood

17 Central Bergen County MARKET SIZE 27,018,913 SF VACANT AVAILABILITY (SF) 966,700 SF VACANT AVAILABILITY (%) 3.6% 2Q18 180,825 SF TOTAL ,345 SF 2Q2018 vs. 1Q2018 AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED Although just west of the Meadowlands, Central Bergen County towns such as Elmwood Park and Saddle Brook offer direct access to Routes 4, 46 and 80 as well as the Garden State Parkway. Although this past quarter saw a spike in Central Bergen s Average Asking Rental Rate, historically Central Bergen County has offered a savings in rent and purchase prices compared to the Meadowlands, while providing similar access to the city. Thomas A. Vetter, sior Senior Vice President NAI James E. Hanson $10.25 PSF 372,795 SF 534,419 SF 0 SF 0 SF 0.5% Trends $1.45 The Central Bergen County submarket ended the quarter with a vacancy of 3.6%. The rate is down 2.2% from the second quarter of 2017 and down 2.3% from the second quarter of Compared to the other submarkets, average asking rates rose the most in the Central Bergen County submarket making this the most expensive submarket. Rates ended the quarter at $10.25 per square foot. Asking rates are up $1.89 per square foot from the second quarter of 2017 and up $2.95 per square foot from the second quarter of Over 180,000 square feet was leased in the second quarter and over 372,000 square feet was absorbed. Top lease transactions included 30,000 square feet leased at 369 Jefferson Street in Saddle Brook and Best Value Kosher Food leasing 27,000 square feet at 475 Mola Boulevard in Saddle Brook. NAI Hanson handled the leasing at 475 Mola Boulevard. $11.00 $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 NNN Rent Overall 305 SF Vacant Available Percent % Total 6.5% 5.5% 4.5% 3.5% 3.0% 475 Mola Boulevard in Saddle Brook sold this quarter from Music Express East, Inc. to The Stro Companies. The 45,000 square foot property sold for $4,015,000 or $89.22 per square foot. NAI Hanson facilitated the transaction. 475 Mola Boulevard, Saddle Brook

18 Suburban Essex MARKET SIZE 23,891,072 SF VACANT AVAILABILITY (SF) 544,572 SF VACANT AVAILABILITY (%) 2.3% 2Q18 101,575 SF TOTAL ,439 SF 2Q2018 vs. 1Q2018 AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED $8.73 PSF 90,290 SF 520,703 SF 89,000 SF 0 SF 0.6% $ ,289 SF Trends The vacancy at the end of the second quarter in the Suburban Essex submarket was 2.3%. The rate is down 2% from the second quarter of 2017 and down 2.1% from the second quarter of Average asking rates are up $0.51 per square foot ending the quarter at $8.73 per square foot. Compared to the second quarter of 2017, the rate is up $1.90 per square foot and compared to the second quarter of 2016, the rate is up $2.33 per square foot. There was over 101,000 square feet leased and over 90,000 square feet absorbed. Top lease transactions included 25,916 square feet leased at 1 Gardner Road in Fairfield and 22,530 square feet at Industrial Road in Fairfield. 16 Law Drive in Fairfield sold in the second quarter from The Hampshire Companies to JEEN International. The 71,048 square foot manufacturing building sold for $6,750,000 or $95.01 per square foot. The building sits on 6.44 acres and features 2 exterior docks. This is the second location for the cosmetic company. Their headquarters is currently located at 24 Madison Road in Fairfield. $9.00 $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $ % 4.5% 3.5% 3.0% 2.5% 2.0% NNN Rent Overall Vacant Available Percent % Total 16 Law Drive, Fairfied

19 Northern Bergen County Leasing activity remains robust with activity slowed by a lack of available inventory. With our recent lease of the 271,195 square foot building at 100 Performance Drive in Mahwah, vacancy rates have been driven down below 5%. Kenneth D. Lundberg, sior Senior Vice President NAI James E. Hanson MARKET SIZE 22,056,315 SF VACANT AVAILABILITY (SF) 1,115,258 SF VACANT AVAILABILITY (%) 5.1% 2Q18 94,637 SF TOTAL ,223 SF 2Q2018 vs. 1Q2018 AVERAGE 2Q18 NET ABSORPTION TOTAL 2018 NET ABSORPTION UNDER CONSTRUCTION DELIVERED $8.62 PSF 178,800 SF 65,708 SF 30,000 SF 0 SF Trends 0.2% $0.13 Vacancy ended the second quarter at 5.1%, a slight decrease from the previous quarter. Vacancy is down 0.3% from the second quarter of 2017 and down 2.4% from the second quarter of Average asking rates continue to remain high in the Bergen County submarkets. This submarket ended with an average asking rate of $8.62 per square foot. Rates are down $0.22 per square foot from the second quarter of 2017, but up $0.78 per square foot from the second quarter of $9.50 $9.00 $8.50 $8.00 $7.50 $7.00 NNN Rent Overall 294,949 SF Vacant Available Percent % Total 9.0% 8.0% 7.0% 3.0% There was over 94,000 square feet leased in the quarter and over 178,000 square feet absorbed. A top lease transaction included Hiossen leasing 22,927 square feet at 50 Maple Street in Norwood. NAI Hanson facilitated the transaction. A top sale transaction included 555 MacArthur Boulevard in Mahwah. Jaguar Land Rover North America sold the property to Premium Capital Resources LLC for $12,800,000 or $57.46 per square foot. The sale included a 116,571 square foot office building and a 106,202 square foot warehouse. Jaguar recently relocated to 1 Sharp Plaza in Mahwah. 50 Maple Street, Norwood

20 2Q2018 Industrial Market Update The world s largest commercial real estate network. 30+ Countries 400 Offices 7,000± Market Leaders NAI James E. Hanson is the largest independently owned commercial real estate firm in the State with over 60 years of experience in the New Jersey industrial market and one of the largest industrial teams. NAI James E. Hanson currently holds 10 SIOR designations, the most SIORs over any other commercial real estate firm in the State. For more information, please contact: William C. Hanson, sior President x145 whanson@naihanson.com 195 North Street, Suite Lanidex Plaza West Teterboro, NJ Parsippany, NJ naihanson.com